Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Uncharacteristically, <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> has <a href="https://links.sgx.com/FileOpen/JMH.ashx?App=Announcement&amp;FileID=636187" target="_blank" rel="noopener">announced</a> it intends to invest up to US$500mn in a share buyback program extending until 30 June 2021. Any shares purchased will be canceled.</p>
<p>JMH has bought back 13.1mn shares at a cost of US$629mn since it resumed buybacks in September last year. As discussed here in the past, that leaves JMH with ~US$1.5-US$1.6bn in the kitty to continue buybacks after <a href="https://www.mmc.com/offer-for-jlt.html" target="_blank" rel="noopener">selling</a> <a href="https://www.smartkarma.com/entities/jardine-lloyd-thompson-group-p" target="_blank" data-smartkarma-citation="entities:22017:1" rel="noopener">Jardine Lloyd Thompson Group P (JLT LN)</a> in 2018 for US$2.2bn. </p>
<p>I say "uncharacteristically" as JMH is not regulatorily obligated to inform the market of any forward buyback program after moving its primary listing to London's standard board in 2014. Why this announcement is being made now is not immediately apparent. Apart from the obligatory SGX share repurchase announcement, JMH has provided zero guidance on the size of the intended buyback to date. The transparency now, however, is welcome.</p>
<p>Using the last traded price, US$500mn translates to 11.1mn shares or 1.53% of shares out, 3.7% of minorities, excluding <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a>'s stake, and 6.6% if excluding JSH's and the Keswick's family stake. Once shares bought are canceled, this should theoretically lift the Keswick's direct stake in JM to ~18.3%.</p>
<p>As always, more below the fold.</p>

Uncharacteristically, Jardine Matheson Holdings (JM SP) has announced it intends to invest up to US$500mn in a share buyback program extending until 30 June 2021. Any shares purchased will be canceled.
JMH has bought back 13.1mn shares at a cost of US$629mn since it resumed buybacks in September last year. As discussed here in the past, that leaves JMH with ~US$1.5-US$1.6bn in the kitty to continue buybacks after selling Jardine Lloyd Thompson Group P (JLT LN) in 2018 for US$2.2bn. 
I say "uncharacteristically" as JMH is not regulatorily obligated to inform the market of any forward buyback program after moving its primary listing to London's standard board in 2014. Why this announcement is being made now is not immediately apparent. Apart from the obligatory SGX share repurchase announcement, JMH has provided zero guidance on the size of the intended buyback to date. The transparency now, however, is welcome.
Using the last traded price, US$500mn translates to 11.1mn shares or 1.53% of shares out, 3.7% of minorities, excluding Jardine Strategic Holdings (JS SP)'s stake, and 6.6% if excluding JSH's and the Keswick's family stake. Once shares bought are canceled, this should theoretically lift the Keswick's direct stake in JM to ~18.3%.
As always, more below the fold.

Jardine Matheson's Buybacks: A Bargain Upon Itself

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<p>This week in StubWorld ...</p>
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<p><a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> is trading "cheap" at a 32% discount to NAV, adjusting for cross-holding. <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> is even wide at 51% discount to NAV, also adjusting for cross-holdings. Is the time ripe for the Keswicks to collapse the structure? Would a move back to Hong Kong help narrow the discount?</p>
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<p><a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a> was trading cheap on a NAV and stub basis this time last month (<a href="https://skr.ma/15ciq" target="_blank" rel="noopener">StubWorld: Matheson Buybacks As Ratio Mean Reverts; JCNC Looking Cheap</a>). It is now even cheaper. Time for a JCNC breakout.</p>
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<p>Preceding my comments on Jardines, are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Jardine Matheson Holdings (JM SP) is trading "cheap" at a 32% discount to NAV, adjusting for cross-holding. Jardine Strategic Holdings (JS SP) is even wide at 51% discount to NAV, also adjusting for cross-holdings. Is the time ripe for the Keswicks to collapse the structure? Would a move back to Hong Kong help narrow the discount?

Jardine Cycle &amp; Carriage (JCNC SP) was trading cheap on a NAV and stub basis this time last month (StubWorld: Matheson Buybacks As Ratio Mean Reverts; JCNC Looking Cheap). It is now even cheaper. Time for a JCNC breakout.


Preceding my comments on Jardines, are the weekly setup/unwind tables for Asia-Pacific Holdcos.




These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.




StubWorld: Would Jardines Move Back To HK?

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<p>This week in StubWorld ...</p>
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<p>The simple ratio (JM/JS) has retraced from its nose-bleed heights on the 19 March, and though still elevated, is gradually retracing to its long-term mean. After a two-month hiatus, <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> resumed its buybacks, which have gathered pace from the middle of this month.</p>
<p>Separately, <a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a> is trading cheap on a NAV and stub basis.</p>
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<p>Preceding my comments on Jardines and JCNC are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...




The simple ratio (JM/JS) has retraced from its nose-bleed heights on the 19 March, and though still elevated, is gradually retracing to its long-term mean. After a two-month hiatus, Jardine Matheson Holdings (JM SP) resumed its buybacks, which have gathered pace from the middle of this month.
Separately, Jardine Cycle &amp; Carriage (JCNC SP) is trading cheap on a NAV and stub basis.




Preceding my comments on Jardines and JCNC are the weekly setup/unwind tables for Asia-Pacific Holdcos.



These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.



StubWorld: Matheson Buybacks As Ratio Mean Reverts; JCNC Looking Cheap

Mandarin Oriental International / Event-Driven

<p>This week in <strong>StubWorld</strong> ...</p>
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<p><a href="https://www.smartkarma.com/entities/toei-co-ltd" target="_blank" data-smartkarma-citation="entities:15379:1" rel="noopener">Toei Co Ltd (9605 JP)</a> is coming up "cheap" versus 40.4%-held <a href="https://www.smartkarma.com/entities/toei-animation-co-ltd" target="_blank" data-smartkarma-citation="entities:18641:1" rel="noopener">Toei Animation (4816 JP)</a>.</p>
<p>And despite local media reports, the conversion of <a href="https://www.smartkarma.com/entities/mandarin-oriental-intl-ltd" target="_blank" data-smartkarma-citation="entities:4773:1" rel="noopener">Mandarin Oriental Intl (MAND SP)</a>'s Excelsior Hotel into an office building continues unabated.</p>
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<p>Preceding my comments on <strong>Toei</strong> &amp; <strong>MAND</strong> are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...


Toei Co Ltd (9605 JP) is coming up "cheap" versus 40.4%-held Toei Animation (4816 JP).
And despite local media reports, the conversion of Mandarin Oriental Intl (MAND SP)'s Excelsior Hotel into an office building continues unabated.


Preceding my comments on Toei &amp; MAND are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.



Equity Bottom-Up

Jardine Matheson Holdings / Equity Bottom-Up

<p>In my insight (<em><a href="https://skr.ma/J2vov" target="_blank" rel="noopener">StubWorld: Strategic Is Free Money Here</a></em>) earlier this week, I thought it was a no brainer unwinding <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> against <a href="https://www.smartkarma.com/entities/jardine-strategic-hldgs-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Hldgs (JS SP)</a> when the ratio (JM/JS) was 2.12x.</p>
<p>The ratio subsequently widened to 2.29x. Then 2.37x yesterday. Today it touched above 2.60x. </p>
<p>The chart below says it all. The ratio has never been higher. And the data below does not factor in dividends, which only serve to elevate the ratio further. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/123/747/original/image_16802575931584592347428.png?1584592348" class="editor-image img-responsive" data-smartkarma-image-id="123747"></figure>
<p>Evidently, a hedge fund - or hedge funds - is/are blowing up, in size. Or exiting wildly without regard to pricing. </p>
<p>This level is not justifiable nor sustainable and will eventually reverse. The circulatory nature of the holdings all but assures a strong correlation between the two stocks over the long-term. The long-term average provides a reasonable expectation, especially as we near regulatory limits on float maintenance.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/123/761/original/blobid0.png?1584594030" class="editor-image img-responsive" data-smartkarma-image-id="123761"></figure>
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<p>This situation is ideal for Jardine Matheson Holders: SWITCH NOW</p>
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<p>Why and how and more is discussed below the fold.</p>

In my insight (StubWorld: Strategic Is Free Money Here) earlier this week, I thought it was a no brainer unwinding Jardine Matheson Holdings (JM SP) against Jardine Strategic Hldgs (JS SP) when the ratio (JM/JS) was 2.12x.
The ratio subsequently widened to 2.29x. Then 2.37x yesterday. Today it touched above 2.60x. 
The chart below says it all. The ratio has never been higher. And the data below does not factor in dividends, which only serve to elevate the ratio further. 

Evidently, a hedge fund - or hedge funds - is/are blowing up, in size. Or exiting wildly without regard to pricing. 
This level is not justifiable nor sustainable and will eventually reverse. The circulatory nature of the holdings all but assures a strong correlation between the two stocks over the long-term. The long-term average provides a reasonable expectation, especially as we near regulatory limits on float maintenance.


This situation is ideal for Jardine Matheson Holders: SWITCH NOW

Why and how and more is discussed below the fold.

United Kingdom

Jardine Lloyd Thompson Group plc is an international provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services.

Jardine Lloyd Thompson Group PLC (JLT LN)

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Jardine Lloyd Thompson Group PLC (JLT LN)

Jardine Matheson's Buybacks: A Bargain Upon Itself

After a year of buybacks, will no clear mandate, Jardine Matheson provides transparency on its repurchase program into 2021.

David Blennerhassett

StubWorld: Would Jardines Move Back To HK?

This week in StubWorld ... Jardine Matheson Holdings (JM SP) is trading "cheap" at a 32% discount to NAV, adjusting for cross-holding. Jardine...

David Blennerhassett

StubWorld: Matheson Buybacks As Ratio Mean Reverts; JCNC Looking Cheap

This week in StubWorld ... The simple ratio (JM/JS) has retraced from its nose-bleed heights on the 19 March, and though still elevated, is...

David Blennerhassett

StubWorld: Toei Corp, Mandarin Oriental

This week in StubWorld ... Toei Co Ltd (9605 JP) is coming up "cheap" versus 40.4%-held Toei Animation (4816 JP). And despite local media...

David Blennerhassett

Jardines: Holy Bargain Basements!

In my insight (StubWorld: Strategic Is Free Money Here) earlier this week, I thought it was a no brainer unwinding Jardine Matheson Holdings (JM...

David Blennerhassett

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52-week Range

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